An additional 46,522 Illinoisans filed for unemployment the week ending May 30, bringing total new jobless claims to 1,200,265 since COVID-19 began shutting down the economy, new U.S. Department of Labor data shows.
The surge in claims during the initial closure of the state’s economy are slowing, however new weekly unemployment claims remain several times greater than the same period last year.
With over 1.2 million Illinoisans filing unemployment claims since COVID-19 began affecting the economy, the state’s estimated real-time unemployment rate now approaches 24%. However, this is likely an underrepresentation, as it does not include those who have stopped looking for work during the crisis. When you add those who have dropped out of the labor force – many of whom are likely not being counted due to mismanagement of the unemployment application system – the estimated unemployment rate would have been 26.5%.
The spike in the state’s unemployment rate has increased racial and ethnic gaps in both health and labor market outcomes. Women, particularly black and Hispanic women, have been the most affected by job losses during the coronavirus pandemic and state-mandated lockdown. The primary reason for the sharper decline for these groups is they tend to be employed in industries that were deemed “non-essential” by Gov. J.B. Pritzker’s stay-at-home order. It is now expected that it could take a decade to overcome the economic losses experienced during the past several months.
The evidence suggests most small businesses have less than two months of cash on hand while the median small enterprise has more than $10,000 in monthly bills and less than one month of cash on hand. Illinois’ small businesses employ the majority of Illinois workers. Allowing businesses to open again is an important step to save lives and livelihoods.
Although lifting a lockdown will not restore economic activity to levels observed before the pandemic, research shows the sequential lift of a lockdown is the best way to mitigate both the human cost of the virus and the economic damage.
Further, Illinois voters need to consider the effects of the progressive income tax hike state leaders are seeking Nov. 3. Economists argue against increasing taxes during a recession. A progressive tax will increase taxes up to 47% on more than 100,000 small businesses just as they are trying to recover from the COVID-19 economic damage, and those small businesses are responsible for the vast majority of new jobs in Illinois.
A safe return to work for Illinois families is the first step to tackle growing racial gaps and to revive the Illinois economy. A tax increase would be a misstep.